DATE: Aug, 2005

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When you stop giving and offering something to the rest of the world,
it's time to turn out the lights.
George Burns

NEWS SOURCES | ARCHIVES OF PAST MONTHS

Recent Economic News

Suggestions of Strength in Economy - 07/30/05 NYTimes
Businesses and households went on a shopping spree this spring, causing warehouse stockpiles to shrink and setting the stage for faster economic growth during the rest of the year. The spending helped extend a solid if unspectacular expansion in the second quarter, when the economy grew at an annual rate of 3.4 percent, the Commerce Department reported yesterday, down from 3.8 percent in the first quarter. Companies took advantage of the weaker dollar to ship more goods abroad, while imports reversed course and fell slightly. It was the first time since 1991 that exports rose and imports dropped in the same quarter. In a sign of better times to come, housing construction, consumer spending and corporate investment increased more rapidly this spring than production did, causing inventories to decline sharply. Economists said companies, especially carmakers, were likely to accelerate production in the second half to rebuild their stockpiles, lifting overall growth.
"When you've got a decline in inventories this large, it's unintended," said David Greenlaw, an economist at Morgan Stanley. "Now producers will start to play catch up."

Economic Reports Continue To Show Quickening Growth - 07/28/05 Washington Post
U.S. factories booked orders more briskly and new-home sales rose to a record high last month, the government reported yesterday, adding to other recent signs that the economy is gaining momentum. New orders for big-ticket manufactured goods rose 1.4 percent in June, the Commerce Department said yesterday. It also increased its previous estimate of May orders for such durable goods -- items expected to last at least three years, such as computers, machinery and appliances -- to a 6.4 percent increase, reflecting in part some big aircraft orders. Sales of new single-family homes increased 4 percent last month to an annual pace of 1.37 million, the department said in a separate report. Other recent reports shows that consumers bought previously owned homes at the highest rate ever in June, retail sales were stronger and employers hired more people.

Greenspan Signals Further Rate Increases - 7/20/05 NY Times
The economy is on a solid footing with inflation at bay and policy makers will keep raising interest rates to keep it that way, Alan Greenspan, chairman of the Federal Reserve Board, told a Congressional committee today.
Noting that recent economic reports indicate that the economy has recovered from a soft patch earlier in the year, Mr. Greenspan said the Federal Reserve would stick to its plan of raising benchmark interest rates, which stand at 3.25 percent today, up 2.25 percent from a year ago. Mr. Greenspan was speaking before the House Financial Services Committee in one of his periodic reports to Congress.
"Thus, our baseline outlook for the U.S. economy is one of sustained economic growth and contained inflation pressures," he said according to an copy of his submitted testimony. "In our view, realizing this outcome will require the Federal Reserve to continue to remove monetary accommodation. This generally favorable outlook, however, is attended by some significant uncertainties that warrant careful scrutiny."
Those uncertainties, according to Mr. Greenspan, included rising labor costs, high and volatile energy prices and low-longer term interest rates, which have helped drive growth in the housing markets in many large urban areas around the country.

No Inflation Reported For June - 7/15/05 Washington Post
Consumer prices were flat last month as energy costs fell briefly, helping boost people's purchasing power and retail spending, the government reported yesterday. But with gasoline prices surging in recent weeks, many economists are forecasting a pickup in inflation this month. The government's consumer price index, one of the most widely followed measures of inflation, was unchanged in June after slipping by 0.1 percent in May, the Labor Department said. With no inflation to offset pay gains, real average weekly earnings for most U.S. workers rose 0.2 percent last month from their level in May, the department said in another report. They were up 0.4 percent in the 12 months that ended in June, the first yearly gain since September.

THE ECONOMY: SEVEN INDICATORS - From CNN Money (as of 8/5/05)

The Indicator
What It's Telling Us
Next Update
Consumer Confidence Slipped more than expectedAug 30
Retail salesStrong growth Aug 11
Leading Economic IndicatorsUp in JuneAug 18
Manufacturing Activity (ISM)Up more than expectedAug 1
Industrial ProductionFastest in five yearsAug 16
Jobs GrowthShort of forecast; unemployment near 4-year low. Sep 25
Inflation (CPI)Inflation in checkAug 16

http://money.cnn.com/news/economy/#indicators

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Congress and CARE
As Congress prepares to resume work after the summer, some observers are predicting that we will see action on charitable reform legislation. While this legislation may include the CARE Act, with provisions for tax-free gifts from IRA accounts, it will likely include much more. The Senate Finance Committee is contemplating stricter rules on donor advised funds and greater IRS oversight of charitable governance. Just as we saw with legislation last year to tighten the rules on tax deductions for donated automobiles, we now see more moves in that direction to address other areas of abuse. This expected action by Congress should not surprise anyone. Historically, Congress has consistently affirmed and protected the charitable tax deduction for bona fide donations. At the same time, Congress has consistently attacked schemes that attempt to misuse charitable giving by providing inappropriate benefits to donors and investors. Although this type of legislation is designed to protect legitimate charitable giving, it will cause an additional regulatory burden on many charities and donors because of the misdeeds of the few.
8/14/05 John Elbare, MBA, CFP www.pgcoach.org

Estate Tax Vote?
Senate Majority Leader William H. Frist, R-Tenn., continued to direct aides on July 26 to promise reporters a vote on full estate tax repeal, but chances for that vote before the August recess appear to be slipping. (Editor's note - several days later Senator Frist announced the vote would occur immediately after the August recess) With several other bills needing action before recess, logistically a vote on the estate tax could be next to impossible.
According to Senate Finance Committee Chair Chuck Grassley, R- Iowa, the Republican party is divided over whether forcing Democrats to vote on estate tax repeal will increase their chances for a compromise or kill it. Grassley said many of his colleagues believe "until we put complete repeal up for a vote, we're not going to get any serious discussion on the other part from the other party."
Max Baucus, D-Mont., has continued to argue that an estate tax vote would only hinder chances at getting a bipartisan solution this year ("There's just not the votes here for total repeal"), but his negotiating counterpart, Sen. Jon Kyl, R-Ariz., has been one of the most vocal supporters of an immediate vote. "I think we'll do it this year [vote on it], pretty soon," Baucus said. "Hopefully September or October."
7/26/05 Planned Giving Design Center

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Three Legal Documents You Can't Live Without
Your state already has a basic plan for distributing your stuff when you die. What your state doesn't have, though, is an efficient way to take care of you if you're still breathing but unable to make your own decisions because of incapacitating illness or injury. So if you get in a car accident and die, your estate will be distributed more or less efficiently. Get in a car accident and end up in a coma, and you could be in a world of hurt.
Who would be authorized to pay your bills or wrangle with insurance companies about your care? Who would decide whether to sue that driver who hit you -- or shut off the respirator that's keeping you going? The state will eventually find someone to fill these roles, after a potentially costly and time-consuming court hearing. But it might not be the person you would want. So at a time when you're most vulnerable, life-and-death decisions could be made for you by a stranger -- or an estranged, distant or greedy relative.
That's why you need the following documents:

  • A durable power of attorney for health care, which lets you name who will make medical decisions for you, and
  • A durable power of attorney for finances, which designates who'll handle money decisions
  • A living will, which tells doctors exactly what kind of care you do and don't want to receive if you're terminally ill and incapacitated. (Some states, including Kentucky, Minnesota, Oklahoma, Oregon, South Carolina, Virginia and Wyoming, combine the living will and the durable power of attorney for health care in the same form.)

Thinking about these issues is not fun, which is probably why most people avoid it. You have to ponder some of the grimmest circumstances imaginable. Do I want to be on a respirator if I'm conscious? If I'm unconscious? Do I want food and water withheld? How about pain medication? You also have to figure out whom to name as your so-called "attorney in fact" or proxy to help implement these decisions for you. You don't have to name the same person for both powers of attorney. In fact, many people find that the people they trust to make health-care decisions are different from the ones they want handling their finances (If you're married or in a committed partnership, that person is a logical choice to fill both roles - but you'll still need back-ups in case he or she is injured or killed in an accident with you).
Liz Pulliam Weston MSNMoney - The Basics

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Estate Tax Compromise Agreement on "Basic Parameters"
Sen. Jon Kyl (R-AZ) and Sen. Max Baucus (D-MT) have spent the past two weeks in intense discussions about an estate tax compromise. Since there are not 60 Senators who support permanent repeal of the estate tax, Sen. Kyl and other opponents of the estate tax have decided to pursue a compromise.
Sen. Kyl describes the compromise in this way, "We have an agreement on basic parameters, but we're both trying to be a little flexible to make sure we can satisfy the requirements of members of our conference and to make sure we can get the votes necessary to pass something." The general parameters will probably include the following:

  1. A substantially expanded estate exemption (final number to be determined).
  2. A substantially lower estate tax rate (final number to be determined).
  3. A step-up in basis for most estate assets.
  4. An extended period, such as ten years, to pay estate taxes on family businesses.
    GiftLaw 7/8/05

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Public Good IRA Rollover Act Introduced in the Senate
The "Public Good IRA Rollover Act" has been introduced in the Senate by Sen. Byron Dorgan (D-ND). This bill (S. 1366) is a companion bill to the House legislation (H.R. 1607) which was introduced last April. Both bills would allow donors to make tax-free transfers from IRAs as charitable gifts. Taxpayers age 70 1/2 or older would be able to make transfers as outright gifts, and those age 59 1/2 or older could make transfers for a life income gift (charitable remainder trust, gift annuity, or pooled income fund). The Senate bill was immediately referred to the Senate Finance Committee. The House bill has been awaiting action by the Ways and Means Committee since its introduction last spring.
From National Committee on Planned Giving

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Please note, individual financial circumstances will vary. The information on this site is meant as general information and does not represent legal or tax advice.. As with all tax and estate planning, please consult your attorney or estate specialist. All material is copyrighted and is for viewing purposes only. This News and Information section has been compiled by Future Focus.
Please report any problems to webmaster. Revised: September 1, 2005 14:02.